International Economics Overview

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which chapter introduces models with performance differences across firms?

Chapter 6

Chapter 9

Chapter 5

Chapter 8 (correct)

The Heckscher-Ohlin model and it's effects on wage inequality, North-South trade, outsourcing, and technological change are discussed in which chapter?

Chapter 6

Chapter 13

Chapter 8

Chapter 5 (correct)

The analysis of global equilibrium using the relative supply – relative demand framework is presented in which chapter?

Chapter 6 (correct)

Chapter 5

Chapter 18

Chapter 8

Which chapter deals with the effects of trade restrictions on United States firms?

Chapter 9 Signup and view all the answers

According to the provided content, which of the following was recently integrated into the DD-AA model?

The case of a liquidity trap Signup and view all the answers

Which chapter discusses the recommendations in the sixth edition of the IMF’s Balance of Payments and International Investment Position Manual?

Chapter 13 Signup and view all the answers

In the material covered, what topic is investigated in the second half of chapter 8?

The role of firms in international trade Signup and view all the answers

Which is NOT a topic covered in Chapter 8?

The effects of trade restrictions on United States firms Signup and view all the answers

What is a primary concern regarding the teaching of international economics?

The gap between outdated models and current issues and research. Signup and view all the answers

What is the approach of this book toward presenting international economics?

To bridge the gap using simple unified framework, step by step. Signup and view all the answers

Why does the book motivate theoretical development using data and policy?

To help students understand the underlying logic with real world examples. Signup and view all the answers

What is the book's main goal in relation to concepts and theory?

To stress concepts and application rather than theoretical formalism. Signup and view all the answers

What background knowledge is assumed for students using this book?

A prior course in basic economics principles is sufficient. Signup and view all the answers

How does this book approach the division between trade and monetary issues?

By integrating both by recurring methods, like the gains from trade concept. Signup and view all the answers

What is an example of recurring themes between trade and monetary sides of the subject?

The idea of gains from trade. Signup and view all the answers

According to the content, how do students assimilate international economics?

When it is linked to actual events in the world economy. Signup and view all the answers

Which of the following is NOT a typical instrument of trade policy?

Fiscal policy Signup and view all the answers

What is the primary goal of import-substituting industrialization?

To reduce reliance on imports by promoting domestic manufacturing. Signup and view all the answers

What is a key difference between a free trade area and a customs union?

A customs union has a common external trade policy, while a free trade area does not. Signup and view all the answers

What does the 'terms of trade' argument for tariffs suggest?

Tariffs can benefit a nation by shifting the world prices of goods. Signup and view all the answers

Which of the following best characterises the concept of 'rent-seeking' in trade policy?

Seeking special trade protections and policies for personal gain Signup and view all the answers

In the context of international trade, what does the acronym 'GATT' stand for?

General Agreement on Tariffs and Trade Signup and view all the answers

What is the primary function of the World Trade Organization (WTO)?

To administer international trade agreements and resolve disputes between nations Signup and view all the answers

What is the ‘infant industry’ argument for protection?

Protecting new industries to help them get established and be able to compete globally Signup and view all the answers

Which resource provides a review of central concepts, review questions, and answers to odd-numbered textbook problems?

The Study Guide Signup and view all the answers

What is the key idea behind 'strategic trade policy'?

Government intervention that aims to give domestic firms a strategic advantage in international competition. Signup and view all the answers

Which supplementary material includes chapter overviews and solutions to end-of-chapter problems?

The Online Instructor's Manual Signup and view all the answers

Which of the following best describes a 'pollution haven'?

Countries that have lax environmental regulations and attract polluting industries. Signup and view all the answers

Which resource offers multiple-choice, essay, mathematical, and graphing problems for each chapter?

The Online Test Bank Signup and view all the answers

What does the 'current account' in a country's balance of payments measure?

The trade and income from investments. Signup and view all the answers

In which format is the Test Bank available?

Word, PDF, and TestGen Signup and view all the answers

What does the term 'exchange rate' refer to?

The ratio at which one currency can be exchanged for another. Signup and view all the answers

If a country's central bank increases the money supply, what is MOST likely to occur to its interest rates in the short run?

Interest rates will decrease Signup and view all the answers

Which resource allows instructors to edit existing questions, add new questions, and generate tests?

The Computerized Test Bank (TestGen) Signup and view all the answers

What is meant by the term ‘covered interest parity’?

An arbitrage condition where interest rates on equivalent assets in 2 countries appear equal due a forward contract. Signup and view all the answers

What does the Online PowerPoint Presentation with Art, Figures, & Lecture Notes primarily consist of?

Text figures and tables for presentations Signup and view all the answers

What is one of the roles money serves, according to the text?

As a unit of account. Signup and view all the answers

Where can additional appendices for the textbook be found?

The Companion Web Site Signup and view all the answers

Which individual revised and updated the Online Test Bank?

Robert F. Brooker Signup and view all the answers

According to the document, how can one request permission to use material from this work?

By submitting a written request via mail, fax, or email. Signup and view all the answers

What does the document indicate about designations of products by manufacturers and sellers?

They are printed in initial caps or all caps when the publisher is aware of a trademark claim. Signup and view all the answers

What is the ISBN-13 for the book 'International Economics: Theory & Policy' according to the document?

978-0-13-214665-4 Signup and view all the answers

Which of the following is NOT a part of International Economics discussed in the introduction?

Government Budget Deficits. Signup and view all the answers

According to the table of contents, what is the primary focus of Part 1 of the book?

International Trade Theory. Signup and view all the answers

Under which part of the book would you most likely find a discussion of specific factors model in international economics?

Part 1: International Trade Theory. Signup and view all the answers

What does the gravity model, as outlined in the text, primarily explain in the realm of international trade?

The volume of trade between countries based on their size and distance. Signup and view all the answers

What does the document suggest about the impact of distance on trade?

Distance serves as an impediment to trade. Signup and view all the answers

What is the Ricardian model primarily used to explain in international economics?

The concept of comparative advantage based on labor productivity. Signup and view all the answers

In the context of the Ricardian model, what is meant by the term 'relative wage'?

The ratio of wage rates between two countries. Signup and view all the answers

Which concept does the 'pauper labor argument' attempt to challenge?

The gains from trade based on comparative advantage. Signup and view all the answers

What is a key assumption of the specific factors model?

Factors of production are specific to certain industries. Signup and view all the answers

What does the document indicate about the relationship between international trade and income distribution?

Trade can affect income distribution and also create winners and losers within a country. Signup and view all the answers

What is the main topic of discussion in Part 3 of the book?

Exchange Rates and Open-Economy Macroeconomics. Signup and view all the answers

Which of the following best describes the purpose of the "Mathematical Postscripts" included in this book?

To offer more complex mathematical formulations and analysis of key models. Signup and view all the answers

Which of the following textbooks focuses primarily on the theoretical aspects of international economics?

International Economics: Theory & Policy by Krugman/Obstfeld/Melitz Signup and view all the answers

Which of these books is LEAST likely to cover the use of calculus in economic analysis?

Principles of Economics by Case/Fair/Oster Signup and view all the answers

Which book would likely provide a deep dive into the subject of econometrics?

Econometrics: A Modern Introduction by Murray Signup and view all the answers

Which of the following books is MOST likely to discuss the impact of environmental regulations on natural resources?

Environmental and Natural Resource Economics by Tietenberg/Lewis Signup and view all the answers

A book focusing on 'The Economic Way of Thinking' would likely explore which central theme?

The fundamental principles that shape economic analysis Signup and view all the answers

Which title would MOST likely cover the topic of strategic behavior in markets?

Markets, Games and Strategic Behavior by Holt Signup and view all the answers

If you are looking for an introduction to health economics, which book would be MOST appropriate?

A Health Economics Primer by Johnson-Lans Signup and view all the answers

Which of these books would MOST likely analyze the impact of public policy on income distribution?

Public Finance and the American Economy by Bruce Signup and view all the answers

Which of the following books would be the MOST appropriate to learn more about labor market issues?

Modern Labor Economics by Ehrenberg/Smith Signup and view all the answers

A book focusing on ‘Urban Economics’ would most likely discuss which topic?

The economics of local governance, real estate and land-use patterns Signup and view all the answers

Which book would be most useful to analyze the relationship between inflation and rational expectations?

Rational Expectations and Inflation by Sargent Signup and view all the answers

A text focused on 'Cost-Benefit Analysis' primarily deals with which type of economic question?

Methods for evaluating public policy and project decisions Signup and view all the answers

Which of these would be the BEST book for a student wanting to learn about the economic development of poorer nations?

The Economics of Developing Countries by Nafziger Signup and view all the answers

If a student is interested in the economic implications of sports, which text would be the MOST relevant?

The Economics of Sports by Leeds/von Allmen Signup and view all the answers

If a student wants to learn the mathematical methods used in economics, which should they choose?

Mathematical Methods for Economics by Klein Signup and view all the answers

Study Notes

Introduction to International Economics

International economics has its roots in the study of trade and finance.
The 18th-century Scottish philosopher David Hume's essay "Of the Balance of Trade" is considered a seminal work in economic thought.
The study of international economics is crucial due to the growing interconnectedness of countries.
International trade and financial flows have increased dramatically.
Countries are more interconnected through trade in goods, services, investment, and flows of money than ever before.
International trade is vital to economic relations.
Exports and imports increased as a percentage of national income from 1960 to 2009.

World Trade: An Overview

International trade patterns are complex and influenced by factors like trade barriers, geography, and country size.
The gravity model helps explain who trades with whom based on factors like distance and size.

Labor Productivity and Comparative Advantage: The Ricardian Model

Comparative advantage arises from the differences in labor productivity of different countries.
Countries specialize in producing goods they can produce at a lower opportunity cost, leading to mutually advantageous trade.
Differences in productivity can affect the distribution of income.
Trade can create losers as well as winners depending on the industry involved.

Specific Factors and Income Distribution

The specific factors model examines how trade affects income distribution, taking into account factors that are immobile across industries.
Immobile factors can be affected by trade if they are particular to an industry.
Income distribution can be unevenly impacted by international trade.
International trade can affect the political economy of trade and labor.

Resources and Trade: The Heckscher-Ohlin Model

The Heckscher-Ohlin model examines how differences in factor endowments (e.g., capital, labor) affect trade patterns.
Countries export goods that use their abundant factors intensively.
Countries import goods that use their scarce factors intensively.
Other factors include trade in resources, and the impact of trade on income.

External Economies of Scale

External economies of scale are often important in international trade.
They arise from factors external to a firm but internal to a specific location.
The importance of economies of scale in an industry changes with international trade.

Firms in the Global Economy

Firms in international trade make decisions regarding exporting, outsourcing, and multinational production.
These decisions are influenced by factors like trade costs, location advantages, and market structure.

Trade Policy

Governments use various instruments to influence international trade, such as tariffs, quotas, subsidies, and other trade restrictions.
Countries and governments have been trading for centuries.
Governments seek to achieve both internal and external balance with policies.
The idea of mutually beneficial trade across nations is not always universally accepted.

Exchange Rates and Open-Economy Macroeconomics

Exchange rates are crucial in an open economy, affecting trade flows and investment.
National income data and the balance payments are key to understanding trade and investment flows.
Exchange rates and balance of payment issues are vital to understanding the role of money, and capital flows.

International Macroeconomic Policy

International monetary systems have evolved over time, with different systems and arrangements.
Many factors influence international trade and investment.
Countries can strive for internal and external balance simultaneously, but tradeoffs can impact each goal.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz tests your knowledge on various chapters of international economics, including models of global trade, the impact of trade restrictions, and recommendations from the IMF. It also covers the Heckscher-Ohlin model and its effects on wage inequality and outsourcing. Challenge yourself and deepen your understanding of international economic theories.